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Wed., June 06, 2012

Sheriff's sale closes book on failed Clayton County resort

Project near McGregor ending in financial loss for some in area

Opponents to the River Bluffs Resort project (from left) Greg Koether, Tim Mason, Harlan Dettma, and Ron Kleinow all of McGregor stand near a sign marking the project site near McGregor. (Jim Slosiarek/The Gazette)A sheriff's sale will be held June 19 to dispose of property formerly intended for the River Bluffs Resort near McGregor.(Jim Slosiarek/The Gazette)

A June 19 sheriff’s sale will likely end the costly and contentious River Buff Resorts economic development saga.

The $138 million planned resort complex that began more than a decade ago with great hopes and fanfare will apparently end in financial loss and hard feelings for many of those involved.

“I don’t feel sorry for them. They were warned,” said Tim Mason, leader of Concerned Citizens of Clayton County, a grass roots group founded to oppose the development.

Proponents of the project have characterized the citizens group as obstructionists who cost the county future jobs, tourist dollars and tax revenues.

The sale, which begins at 10 a.m. at the Clayton County Law Enforcement Center, will dispose of the assets of what was to have been an upscale tourist attraction consisting of a hotel, water park, golf course and condominium and single family housing.

Before the project sputtered out in 2006, it generated heated public meetings, lawsuits and countersuits.

The prospect of taxpayer-funded incentives — initially through a state Vision Iowa grant and later through a county tax increment financing district — encouraged developers to undertake the project.

After Vision Iowa announced its intention to issue a $3.5 million grant to the project, Mason and his colleagues — local farmers Harlan Dettman, Greg Koether and Shawn Kleinow — researched the backgrounds of the developers, Conrad Seymour, then of La Crosse, Wis., and James Daughtry, then of La Quinta, Calif., neither of whom could be reached for this article.

Their research uncovered widespread dissatisfaction with their refurbishing of a downtown building in La Crosse and their development of a golf course/residential project in Necedah, Wis.

In 2003, the Vision Iowa board withdrew the grant after a due diligence investigation largely substantiated the group’s claims.

The developers then persuaded the Clayton County supervisors to establish a tax increment financing district that was to have provided the source of payments for a $20 million tax-exempt urban renewal revenue bond to be issued to Daughtry.

Site grading began in 2005 and continued the following year, with about 200 acres affected. Failure to maintain stormwater control resulted in sediment running off into a nearby trout stream, Sny Magill, prompting the Department of Natural Resources to assess about $55,000 in penalties, which were never collected.

A lawsuit filed by the Attorney General’s Office was later dismissed after the site was stabilized and ownership of the property changed hands, according to DNR attorney Jon Tack, who said: “They left the site a mess.

With the sheriff’s sale of about 366 acres of mixed crop and forest land, the Freedom Bank of Elkader, which holds the mortgage on the property, stands to recover all or much of about $1.7 million it is owed.

Bank President Keith Garms declined to be interviewed for this article.

Two major lien holders — C.J. Moyna and Sons Inc. of Elkader and P.A. McGuire Construction Inc. of Highland, Wis. — will likely get little if any of the more than $1 million owed to the two companies for work that accomplished little more than choking a nearby trout stream with sediment.

Nor will the state of Iowa, which invested considerable time and effort in tendering and later withdrawing a $3.5 million Vision Iowa grant.

Nor will the citizens of Clayton County, who spent more than $300,000, most of which went to lawyers, in attempts to keep the project alive after the state withdrew the Vision Iowa grant.

Al Taylor, chief financial officer for Moyna and Sons, said the firm wrote off its losses several years ago and has “no hopes of recovering anything from the sale.” The McGuire construction company has similar expectations, according to an employee who declined to give his name.

Kevin Lambert, who runs an appraisal business in Portage, Wis., said he wrote off “a five-figure loss” several years ago for unpaid work he did on the project.

“Everyone was gung ho for water parks” at the time. “They believed people would come if you built it, but that was not necessarily so,” said Lambert, who analyzed a feasibility study commissioned by the developers.

Lambert said he never would have undertaken the project had he known then of the developers’ track records.

“They left their mark on Necedah,” said Lambert, referring to a Seymour-Daughtry development that fell short of expectations, leaving the central Wisconsin community with a TIF district classified as “severely distressed.”

Necedah Village Administrator Roger Herried said the tax value of the projects in the TIF district — a golf course, assisted living units and residential lots — is about a third of the $12 million needed to cash flow.Herried said the underperforming TIF district has strained village finances, forcing it to refinance its debt under a state law passed specifically to aid communities like Necedah.